Autostrade, an Italian motorway company, issued a U.S.-dollar bond arranged to be sold internationally outside any single national bond-market framework. The deal is widely credited as the starting point of the modern Eurobond market: an offshore market for bonds issued in a currency different from the country where they are sold.
On this date, President John F. Kennedy asked Congress for an Interest Equalization Tax (IET) to discourage U.S. investors from buying foreign securities. The proposal signaled tighter U.S. controls on international capital flows and pushed banks and borrowers to look for offshore ways to raise dollar funding.
The Interest Equalization Tax became U.S. law, increasing the cost for U.S. investors to buy many foreign securities. With the U.S. market less accessible for foreign borrowers, offshore dollar bond issuance in Europe expanded—one of the key conditions that helped the Eurobond market grow.
Morgan Guaranty’s Brussels operation launched a pilot settlement service that became the foundation of Euroclear, one of the first international central securities depositories (ICSDs). By reducing failed deliveries and paperwork, Euroclear supported higher trading volumes and broader participation in Eurobonds.
Market participants formed the Association of International Bond Dealers (AIBD) in Zurich to coordinate rules and conventions for trading and settlement in the fast-growing cross-border bond market. This self-organization helped Eurobonds function across many jurisdictions without a single regulator.
After 1963, Eurobonds became a major channel for cross-border borrowing in U.S. dollars, growing rapidly through the later 1960s. A U.S. government analysis later linked this rise to the IET’s effect of limiting foreign borrowing in New York, which encouraged offshore issuance and distribution networks in Europe.
Banks established Cedel in Luxembourg to offer an alternative ICSD for Eurobond clearing and custody. Competition between the two systems helped scale cross-border settlement infrastructure—critical for a market built on bearer bonds and multi-country distribution.
After the 1973 oil-price shock, large oil-exporter surpluses flowed into international banks and were lent onward to governments and firms. This wave of cross-border lending and investment increased demand for international funding channels and reinforced the broader “euro” markets that surrounded Eurobonds.
Central bank governors created the Basel Committee on Banking Supervision after turmoil in international banking and currency markets, aiming to close gaps where cross-border banks might escape oversight. Although focused on banks, the move mattered for Eurobond markets because Eurobond dealing relied heavily on internationally active banks.
The Basel Committee’s “Concordat” established principles for how supervisors should share responsibility for banks’ foreign branches and subsidiaries. Clearer expectations for cross-border supervision supported the financial institutions that underwrote, traded, and funded Eurobond activity.
Major banks set up the International Primary Market Association (IPMA) to develop common recommendations for how international bonds were structured and sold in the primary (new issue) market. Together with AIBD/ISMA in secondary trading, these bodies strengthened rulebooks for Eurobond issuance and distribution.
Reforms to London’s securities markets removed fixed commissions, allowed outside ownership of brokers, and modernized trading practices. These changes reinforced London’s role as a leading center for international securities business, including Eurobond underwriting and trading.
The European Community adopted Directive 88/361/EEC to implement freer movement of capital among member states. Removing barriers to cross-border capital flows supported deeper integration of European financial markets and made Eurobond issuance and investment easier across the Community.
The directive’s liberalization timetable culminated in 1990, helping normalize cross-border investing within the European Community. By the early 1990s, the Eurobond market operated with more mature trading standards, clearing infrastructure, and a policy environment more supportive of cross-border capital markets—setting the stage for continued expansion beyond the 1990s.
Eurobond Market: Creation and Expansion, 1963–1990s